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Review of the Effectiveness of NEM Security and Reliability Arrangements in light of Extreme Weather Events

Review of the Effectiveness of NEM Security and Reliability Arrangements in light of Extreme Weather Events

Market Review: Completed

Overview

On 4 August 2010, the AEMC published the final report for the Review of the Effectiveness of NEM Security and Reliability Arrangements in light of Extreme Weather Events. The report was provided to the MCE on 31 May 2010 in accordance with the revised terms of reference for the review.

On 4 August 2010, the AEMC published the final report for the Review of the Effectiveness of NEM Security and Reliability Arrangements in light of Extreme Weather Events. The report was provided to the MCE on 31 May 2010 in accordance with the revised terms of reference for the review.

Final Report

The final report concludes that there are a number of key areas where improvements can be made to existing electricity market frameworks and mechanisms to enable the NEM to respond more effectively to future extreme weather events. Our proposed changes also seek to ensure that consumer expectations for reliability of electricity supply are achieved and delivered as efficiently as possible.

Background

On 28 April 2009, the Ministerial Council on Energy (MCE) directed the AEMC to conduct a review of the effectiveness of National Electricity Market (NEM) security and reliability arrangements in light of extreme weather events.

The MCE's request for advice directs the AEMC to, in the context of extreme weather events such as droughts, heatwaves, storms, floods and bushfires:

First Interim Report

On 1 June 2009, the AEMC submitted its first interim report to the MCE which outlined measures that are currently under consideration that would improve system reliability and security. It also reported on measures that could be taken in the short term (prior to the summer of 2009/10) to improve system reliability and security. This report was published on 29 October 2009.

examine the current arrangements for maintaining the security and reliability of supply to end users of electricity and provide a risk assessment of the capability of those arrangements to maintain adequate, secure and reliable supplies;

provide advice on the effectiveness of, and options for, cost-effective improvements to current security and reliability arrangements; and

if appropriate, identify any cost-effective changes to the market frameworks that may be available to mitigate the frequency and severity of threats to the security and reliability of the power system.

Second Interim Report

On 14 August 2009, the MCE revised the terms of reference to require the AEMC to submit a second interim report providing specific advice on the reliability standard and the market mechanisms to achieve that standard.

On 18 December 2009, the AEMC provided its second interim report to the MCE in accordance with the Revised Terms of Reference for the Review. This Report specifically focused on information and advice sought by the MCE regarding the NEM reliability standard and market settings and focussed advice on any cost-effective changes that could be made to energy market frameworks that would improve system reliability in the longer term and contribute to the more effective management of system reliability during future extreme weather events.

The Second Interim Report was published on the 2 March 2010. To facilitate stakeholder consultation, a consultation paper that outlined the key issues considered relevant for the Review Final Report was also published.